EP 138

Wrongful Termination in Construction and how to spot a Termination at Will Clause. (EP 138)



In the studio today, I am joined by Abbie Chisnall, a construction solicitor at Holmes & Hills Solicitors. Abbie is a Construction Lawyer who helps construction companies to avoid costly disputes and keep the money flowing within the industry.

In today’s conversation, Abbie shares how more and more she sees wrongful termination impact Construction Contracts. Most construction contracts contain termination clauses that give parties the right to terminate in certain circumstances. However, Abbie is more on cases where the correct procedure has not been followed.

Abbie shares stories of her experience and explains how to avoid making mistakes in termination and how to react if you have been wrongfully terminated.

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Paul Heming: Hello and welcome to episode 138 of the Own the Built Podcast with me, Paul Heming. Welcome back everyone, and a big thank you to you all. We’ve been doing amazingly well. The podcast at the moment, it’s grown. I’ve been asking people who reach out to me to share it with a couple of their mates. So if you are listening to the show and you are enjoying it, if you could share it with one or two of your friends, that would be awesome. Whilst you’re doing that, you can also go down to the show notes and you’ll see that we’ve still got the PQQ template linked. So if you go and download that, you can have that for free. At C-link, we pre-qualify subcontractors, main contractors all day, every day. We’ve got an automated version of that, but if you want a simple old school word version, good luck to I say and just go down to the show notes and you can download that. Onto the show today, in the studio, I’m joined by Abbie Chisnall, who is a construction solicitor at Holmes and Hills Solicitors. Abbie is a construction lawyer who helps companies avoid costly disputes and keep the money flowing within the industry. I have everyone’s attention immediately. We all want the money to keep flowing. Abbie, welcome to the show today. You follow in your colleagues footsteps, both Lawrence Pierce, Samuel Bowden have been on the show before. How are you doing? How are you feeling today?

Abbie Chisnall: Yeah, good. Thanks Paul. Yeah, great to be on the show and follow the footsteps of my colleagues.

Paul Heming: Yeah, no, the pleasure is all mine. And the question that I always ask at the start of these conversations is tell us about your own career, your own journey experience, and how have you ended up doing what you now do in construction?

Abbie Chisnall: Yeah, so I did my law degree, finished my law degree and I paralegal at a local regional law firm. And there I was working for the broad dispute resolution team. And one of the partners that I worked for, his particular interest was construction. And I just started to pick up experience for him, with him really liked it. Then I got a training contract in London, so went and worked at a city firm. Again, loved construction. So that’s where I qualified. I qualified with that London firm. Just, enjoyed all things construction. And then I’m now back close to home, back in Essex, working at Holmes and Hills. And I’m coming up to two years qualification.

Paul Heming: Excellent. Very, very good. I mean the phrase that sticks out to me there, Abbie, is I loved construction, I love construction. When you were heading into the world of the law, did you see construction as a natural place for you to end up? Or is it just a place where you have ended up?

Abbie Chisnall: Oh, it’s just a place I have ended up. I do at law school and stuff like that. You wouldn’t ever even, construction isn’t a topic that is discussed really. It’s just purely by luck working at the, that first law firm I picked up an interest in it and it’s just all sort of spun from there. So I feel very grateful that I got introduced to it. And yeah, once I’d done that, I knew that it was for me. And yeah, there was no going back.

Paul Heming: Really? So, tell me, describe how you know its view, what it is that you love about it.

Abbie Chisnall: First of all, it’s the clients. I just think the industry, a great bunch of people mainly all working together for the same aim, I can have a laugh with my clients. I really get on with them. You know, there’s a really good, all great bunch of people to work with. A lot of people see lawyers as stuffy people in pinstripe suits, but that’s not what we’re about here. And not what the construction industry is about either. I like that, I can pick up the phone and have a frank conversation with my clients and not have to think, oh, they’re not worried to discuss with me. Because if I know the full facts, if they can tell me everything, much better advice I can give them. So I like that and I like the fast paced nature of it, of a lot of what we do is adjudication, very fast paced. The industry is, they get a call and they need urgent advice that day because of something that’s happened on site and I like that keeps me on my toes.

Paul Heming: It keeps you on your toes.

Abbie Chisnall: Yeah. So it’s interesting.

Paul Heming: So you like it, it’s a bit less, I’m trying to think of, cooperative almost that you’re speaking to a lot of business owners as well, I guess really at the heart of what is driving business success.

Abbie Chisnall: Yeah, definitely. It’s still business focus, but I tend to get a lot of people that I speak to, quite a lot of the subcontractors, for example, have started off as a working on site tools, work their way up and I love that. I love that the knowledge that they have the experience that they have that they can then give to their business. Yeah, it is great. And it’s really rewarding to see that and then help them because quite often we’ll get a company come to us and it’s like, well, I started on the site, I’ve done this, I’ve worked my way up. I’m now out of my depth. For us to go in there, be their legal partner, show them how to review contracts, show them how to avoid disputes. That’s a really rewarding journey. And like I said, I really the type of people that do that and yeah, it’s great to be involved with their journey.

Paul Heming: I love it. I love it. Spencer, I love that you’re saying that exactly resonates with how I view it. It’s one of those industries where anybody can do anything and that represents both opportunities and risks and challenges. But it’s an amazing sector and too often people kind of look down on it, but I think it’s that exact reason that you can go from any position and do anything that makes it such an amazing sector. Can I ask you, you must be seeing lots of cases, you must get a bit of a feel for where the sector is at and what we’re doing as an industry? How do you view today’s construction industry? What’s your sense of what your clients are saying to you?

Abbie Chisnall: Yeah, unfortunately at the moment, I think everyone is sort of feeling the crunch. Obviously the news, it’s well known that there’s a lot of insolvencies in construction sector itself. Like we’re one of the highest insolvency rates. And that is the biggest thing that people are talking about. And then we have a knock on effect on our clients especially in the subcontractor, main contractor industry. Costs are trying to be cut everywhere. And unfortunately that results in payment disputes. We’ve got people on site who have had major sort of price and material increases, but unfortunately the contract doesn’t reflect that. And then they’re having all these difficulties. Because obviously we’ve seen the price rise major in the last few years and here we are. So its insolvency and the price crunch, everyone is feeling it, unfortunately. Yeah.

Paul Heming: And it’s difficult to get paid right now, isn’t it? Yeah, that certainly resonates with everything that the previous conversations that we have on own the build, the conversations we have with our clients certainly feels like that we’re in a tough place at the moment. It doesn’t mean it’s an impossible place, but it’s definitely tougher. And most construction contracts include termination clauses, which gives the right to either party, whether that’s client and main contractor or main contractor and subcontractor even client and subcontractor, depending on the procurement route. It gives them the right to terminate the contracts in specific circumstances. Now, in the context of we’re in your sense of the construction industry, is that it’s a difficult place for everyone to be right now. Client may in the sub, you wanted to talk today about wrongful termination before we jump in to all of your working examples and the like, can you ground the conversation with a definition of termination clauses and then what you mean by wrongful termination?

Abbie Chisnall: Yeah, of course. So, as you’ve said, most contracts will have provisions on how you can terminate the contract. This is the common things that we see, for example, are if the contract becomes insolvent, then automatically there’ll be termination in pretty much all contracts as well or standard contracts. You’ll have termination by default. So this is usually the employer or the main contractor against the subcontractor or main contractor. If the subcontractor or main contractor defaults for a certain provision set out in the contract, then the main contractor, for example, if we’re taking main contractor and subcontractor scenario will have the ability to terminate the contract for that default. However, there are strict provisions on how you can do that. Most commonly you have to give a formal warning. So a default notice saying you’ve got seven days to rectify this on site, otherwise we will terminate. And then you have to send the termination notice afterwards. Wrongful termination, therefore is when these aren’t followed. So for example, you get the number of days that you need to issue the default notice wrong. So you…

Paul Heming: Or don’t issue one.

Abbie Chisnall: Yeah. Or don’t issue it, go straight to termination. Or the contract will say that it has to be sent to the registered office by post and you send it by email for example. That all means that the notices will be invalid and therefore that accounts to wrongful termination.

Paul Heming: It is funny, right? Because that example of it says you must send the notice by post to the office as opposed to via email. I know that exactly that is true. But to non-legal professionals, you think, oh, give it a rest. That’s just nonsense. I’m not buying that. I’ll check my notes, forget it, but it comes down to wrongful termination. With these conversations, but I get kind of technical or a bit more complex. I always like to kind of simplify it by creating a practical working exam that we can kind of talk through the episode, right? So one of the things that happens often, and we talked about it recently, was walking off site as a subcontractor, I’m not getting paid, I’m going to walk off the site. And we talked about that a few episodes ago and the advice which, the guys actually an adjudicator was so often subcontractors will walk off site because they’re not getting paid and it’s actually incredibly detrimental to them because they can then be terminated because one of the things that they’ve done wrong is they’ve acted in default, right? So let’s have a simple example. What would, and let’s be, I don’t know, client to main contractor, right? I’ll be the main contractor. You can be the client. What would be a typical default that I’ve done?

Abbie Chisnall: Not progressing works quick enough. So yeah, delays on site would be a typical one that we see.

Paul Heming: So our program is 12 months, we are four months in and we’ve completed one month of work, right. And we’re going slow. So what you would do is you would send me a default notice saying if you don’t rectify this in seven days and start progressing better or agreeing a new program or whatever.

Abbie Chisnall: Yeah. Working with us.

Paul Heming: I can kick you off site.

Abbie Chisnall: Yeah, indeed.

Paul Heming: And if you just said to me, you’re offsite, you’re rubbish, you’ve wrongfully terminated. Is that correct?

Abbie Chisnall: Yes, that’s correct. If unless there was something else under the contract which allowed you to…

Paul Heming: Oh, you’re such a lawyer, aren’t you just want to get your little caveat.

Abbie Chisnall: But yes, if the client was trying to terminate the contract for a reason of default, then yes, they’d have to follow that procedure. And if that’s what the contract said and they didn’t do that, it would be wrongful termination.

Paul Heming: And how many different defaults are there under like a standard contract? It’s, I’m guessing program is payment one or how does it work?

Abbie Chisnall: Yeah, there could be many. They’re usually listed, but it could also be very vague. Just sort of it doesn’t even have to say program not progressing the works well, what is that? If we don’t define it at the start of the contract, then yeah. Or not getting paid can be one working the other way. There’s so many different reasons, health and safety breaches on site, for example. Yeah. There’s numerous and it sometimes it would, most contracts would sort of specify certain ones. Like I say, it could be broad as well.

Paul Heming: So I think you’ve actually touched on a really interesting point there about contract negotiation and particularly in today’s market where you are seeing a lot of wrongful termination, right? This is something for the listeners to be thinking about.

Abbie Chisnall: Definitely.

Paul Heming: When people are signing construction contracts, whether they’re drafting them or receiving them, what is your advice around termination? What should be the limitation of that termination clause? Because should you be looking out for 25 different ways for it to be terminated should be a red flag. Like what’s typical?

Abbie Chisnall: Yes, definitely. You need to be looking at the termination was and understanding what the reasons are for default. And if there are a long list of things that you don’t think are actually default situations, try and cut those back and try and limit and narrow it to as small and finite as possible. So there’s only three grounds if that’s what you think would actually constitute a default limit as much as possible. You don’t want really broad clauses, which they can basically terminate for anything you do that could be allegedly a default. It needs to be as narrow as possible.

Paul Heming: It’s also a bit of a red flag, isn’t it? If there is a big schedule of amendments around the termination clause, you’ve got to be thinking, why does this client of mine want to have this big schedule of amendments for terminating? They must be a client that does a lot of terminations, if they’re bothered to think about, no, we need it for reason X, Y, and Z, right?

Abbie Chisnall: Yeah, definitely. Yeah, especially if it’s a sort of a JCT or NEC, they’re meant to be standard forms. They’re not meant to be heavily amended, although we see it all the time. So heavily amended JCTs, NECs, whatever standard form contracts you’re using, that is a red flag in the first instance. If you’ve got pages and pages of scheduled amendments, because you’re not then contracting on standard terms which are meant to be fair within so many rumors are meant to be an equal play for the parties. That’s what the purpose is, but you’re not going to be, if there’s a huge schedule of amendments to it.

Paul Heming: And we’re not in the business of naming names at all. That is not what we’re here to do. But if you are advising any one of your clients and you see amendments around termination, what is your gut reaction to that?

Abbie Chisnall: The thing is, with a lot of amendments, it obviously, it just depends what they say. Like you say, initially it would be a red flag, but my gut feeling would be I need to review them in detail and tell you what actual detriment this could be to you. Quite often, as long as the party is aware what they’ve contracted into, there’s ways that you can mitigate that. And at the end of the day, nobody wants to be in default. No one wants to breach, no one wants to be slow on site. But if you know that that is a possible reason that the contract’s going to be terminated, for example…

Paul Heming: You can manage it.

Abbie Chisnall: You manage it. And that’s what it’s all about. Because I do understand what you say. It is a red flag and it is daunting as well when you get all that through and you see all those amendments. But my initial, my gut feeling would be, yes, it’s a red flag, but there’s ways to work through this. It’s not the ‘be or end all.’

Paul Heming: But if I flip that question on its head and remember I’m the client now, and I say to you, I’d quite like, oh, you are going to draft me these contracts, Abbie, for this project that I’ve got coming up. I would quite like to play around with the termination clause and make some amendments to it. Why would I do that? And you are then the person who has to draft it. The only reasons I’m doing that are because I want to make those clauses more draconian so that I can use them, right?

Abbie Chisnall: Yeah. So you can exercise your right to terminate and to not have to pay a loss of profit claim for kicking someone offsite if they’re not doing what you want them to do. And unfortunately, we’ve seen a lot of subcontractors or main contractors are kicking up a fuss about payment because they can’t continue the project unless they’re going to be paid for it. And unfortunately that’s what they get back. They get a termination and they get a termination notice, default notice if that’s done correctly, that’s fine. But if that protects the client or main contractor from having a major loss of profit claim against them. But if they haven’t, that’s the situation that that we’re in. So it is to protect that party to give them the freedom to terminate as they wish. And secondly, to stop giving rise to loss of profit claims.

Paul Heming: Yeah, no, that makes perfect sense. And after the break, let’s get into some more details, some more examples, talk about subcontractors, main contractors, et cetera, because I think there’s a lot to discuss, but we’ll do that right after this break.
I want to go back to our conversations, a few weeks back when we sat down and brainstorm this conversation. And you were talking about amendments that had been made by a main contractor to a contract that had been signed by the mainland subcontractor, which gave a broader spectrum of reasons to terminate. Could you just talk us through that working example so that everyone can really get to the heart of this topic? Because it really helped me to do so.

Abbie Chisnall: Yeah. So we’ve recently acted for a scaffolding contract in a wrongful termination claim. Within the contract that the parties had, there were different ways to terminate the contract and the other side alleged that the scaffolding contractor wasn’t progressing works. It actually, once we looked at the contract, it was wrongful termination, but unfortunately there was many different caveats under the contract, which the main contractor had put in an amended. So for example, the scaffolding equipment would remain on site. So essentially our client had no right to have the equipment back until the completion of the project, which obviously getting a new contractor in could be month, that could be months, years away. No loss of profit claim. So that was their work that they had scheduled for the next two years. They’ve got a million pound contract, which they thought they were going to have for the next couple of year’s contract works. No, there was no loss of profit on that. So it had to go straight out, try and find new work but I think the key thing is really understanding what, not just what the termination clause says, but what that actually means on termination. You’re only going to get, usually you’ll only get paid for the works that you’ve completed up to the date of termination and then no loss of profit. And then also that they have the pleasure of keeping your equipment as well.

Paul Heming: But that is, or maybe I’m wrong, but that feels like an amend, that’s not the standard form of contract.

Abbie Chisnall: No.

Paul Heming: That’s the main contract amended those terms to say on termination, you can’t have any loss of profit claim too bad and therefore we’re keeping all your equipment, which is not standard. Which is why we’re then saying in part one of this show, make sure you check your termination clause because everyone listening, whoever you are would listen to that think, wow, that is a tough blow to take, but you signed up to that contract and this is why the amendments to the termination clause are so key, right?

Abbie Chisnall: Yeah, definitely. And that’s why, yeah, it’s understanding that, when you sign up to the contract, and unfortunately if it’s two commercial parties, although it seems outrageous, the court say, well, your two commercial parties, you entered into it, you should have taken legal advice if you didn’t understand what the terms meant. But yet it’s definitely not standard as in it would be in standard form contracts, but it is a bespoke amendment which many people will seek to use because they want that, right?

Paul Heming: Yeah. And so in a standard form contract, is it that you can take your stuff when you leave and there is a loss of profit claim if acceptable?

Abbie Chisnall: Yes, it would be, but on, it would be probably caveated in certain ways. Obviously it depends which standard form. But there would be, you could terminate for default and there might be a mechanism to have a loss of profit claim. But it does depend on which one they all have their different…

Paul Heming: Yeah, and these things that they’re, once you understand them at tender stage, I think you can have a really in simple commercial conversation in this example and say, okay, so I’m happy that you’ve accepted my proposal for a hundred grand for this job. This termination clause just seems pretty ridiculous to me, to be honest. You’re saying that, let’s create an example. You are saying that if you decide to kick me offsite, this is a two year project, I have no means to get any claim back for the fact that I’ve lost two years’ worth of work and you’re going to keep all of my scaffolding, are you serious about this? Because that doesn’t make any sense. Can we just go back to the standard please? And you’d think through having that intelligent conversation or it’s not even, it’s quite simple. The person on the other side would be like, yeah, that’s fair enough. But the fact is that these amendments are made, no one really looks or it’s not the first place you are drawn to. Is it the termination clauses and these are just standard amendments that are made and they get signed off by 50% of the people that signed that contract? The other 50% might argue it, but you have to, it’s so important. And what you are saying in the context of today’s market is this is a place where people are going to terminate because of the state of the market. You’ve got to be focused on it, right?

Abbie Chisnall: Yeah, definitely. And if you are the one that’s shouting about payment, and unfortunately yes, that is good in the sense that you are trying to, they’re making them aware, they may just pay you or that might be the reason. That might be a trigger. And they think we’ve got to get this subby, for example, off site because they’re causing too much of a fuss when all you’re doing is asking to be paid for the work that you’ve done. And they’ll find any way, if they’ve got a really broad termination provision in their contract, they’ll find any way to then do that and get someone in to do it. Do it cheaper and kick up less of a fuss, unfortunately.

Paul Heming: Yeah, no, that makes sense. So we’ve talked a lot about actually termination as opposed to wrongful termination. Sticking with your example now then. What happened? Because I’m guessing that they actually wrongfully terminated. So talk us through the case if you like.

Abbie Chisnall: Yeah, so what happened is that, they came to us and they said, oh look, our contract’s been terminated, we don’t agree with what’s happened. They thought it was valid. We’re reviewed all the documents. And it actually turned out that it wasn’t validly terminated, it was wrongful termination because they’d miscounted the days basically between the default notice and the termination notice. So we then wrote to them and said, look, this is wrongful termination, our client, once this equipment back and once a lost profit claim, basically, they said, no chance, see you later. It is lawful termination. So off we went to adjudication and the adjudicator did award in the subcontractors favor, which was a great result. They got their loss of profit.

Paul Heming: How was it?

Abbie Chisnall: It was all to do with the days and the notice, which is, it does sound crazy.

Paul Heming: It sounds ridiculous, so it’s seven days or whatever. Let’s say its seven days, right? And it’s the 1st of June and they said you’re given seven days’ notice and if it’s not remedied by the seventh or the eighth or whatever it would be, you’re off. What did they do?

Abbie Chisnall: The subcontractor did write back and say, we are pressing, this is what we’re doing this week. This is the program, which is great. If you do get a default notice issue should respond as soon as possible, setting out why you disagree. The client did do that initially and then they received the termination notice and that’s when they sought legal advice. Because they thought, oh, it’s unfair. But they didn’t think it was wrongful, they just assumed that they were following the contract correctly. And unfortunately what they’d done, they were frustrated and trying to speak to the main contractor about the situation. But yeah, that’s all that happened. The main contractor assumed that they had terminated valid lease. So that was it. Job done.

Paul Heming: And so I’m now thinking about if I am the client or if I’m the main contractor, the clients and the end client and the main contractor are the two people. Like if you’re doing termination clauses, what do you do to write them correctly?

Abbie Chisnall: To issue a notice correctly. Yeah.

Paul Heming: Yeah. What’s the procedure to make sure you don’t fall into that track?

Abbie Chisnall: Follow the contract and if you don’t understand the contract, seek legal advice on it. I think is, like I said, time periods are key. There will usually be a clause on the notice and where you should have to send it, you might be corresponding with one address usually even if you’re by email, but one address usually what was on your order form or something. But then the actual contract might say, or the terms conditions might say, all notices are not valid unless sent to our registered office address. And something just as simple as that, don’t send them by post. It could even specify it has to be recorded delivery, not just first class. All things like that could all make sure, it could all make it invalid.

Paul Heming: Just being a sensible human being here if it was sent by recorded delivery, by first class, not recorded delivery. Is it really going to be invalid?

Abbie Chisnall: Could be, yeah. It depends on the specific wording of the clause, but it could be because it’s not valid, it wouldn’t be deemed served, so it wouldn’t be…

Paul Heming: You lawyers really write me up.

Abbie Chisnall: Yeah, I know it seems ridiculous. And arguments can always be put forward both ways if you go to adjudication, that’s depending on who we are arguing for, you’d say a reasonable person would, if they received it in the post, if the contract said first class and it’s been recorded or vice versa. But at the end of the day, if the contract says, if the contract says it, but there’s always arguments that can be made and that’s what we’re here for.

Paul Heming: Yeah. No, absolutely. But the thing is, it’s actually taking care and attention to think about these things in detail. And then by the same token, if you are the subcontractor and you are receiving, you receive something which appears to be a default notice heading to termination. What is your advice to them in how they should act?

Abbie Chisnall: So firstly, when they receive the default notice, make sure you respond to it. At that stage, I would seek legal advice just to see if even that notice is valid make sure they’ve followed the contract procedure for that. The grounds that they say that they’re alleging the default on, we can check if that’s valid under the contract. So make sure you check that and respond. If you don’t respond to that, there’s less chance of then alleging, it was wrongful because you should have responded to that and out of your position in the first place. And I think one thing is understanding the contract, like we’ve said before, when you’re entering into it, so you can spot, if you get a default notice or a termination notice, you can think, oh, hang on a second, is that what we signed up for? Did we allow this under the contract? If you understand your contract from the start, you’ll be able to know hopefully whether it’s valid or not, or whether you need to seek legal advice about it. So it is just understanding that contract is key for both sides of the party.

Paul Heming: Yeah, I completely and utterly agree with every single word you just said. What is, this is like moving the conversation on slightly, what is a termination at will clause? Because that sounds scary. It’s a little old me.

Abbie Chisnall: It is very scary. So all of the termination we’re speaking about before was about termination for default termination at will basically means that a party can terminate whenever they like, for whatever reason they like.

Paul Heming: What do you mean? Explain a very brief example of what the wording of a termination will clause would be.

Abbie Chisnall: So it would basically say the party or the main contractor, the client, the employer can terminate this contract whenever…

Paul Heming: You are smiling. It’s scary stuff.

Abbie Chisnall: No, yeah, it is madness.

Paul Heming: So it doesn’t matter what happens. I can do whatever I…

Abbie Chisnall: It doesn’t matter.

Paul Heming: That’s basically saying I can do whatever I want, whenever I want. You could be on the job, you could be off it, you could be do an amazing, I can get rid of you.

Abbie Chisnall: But yeah, if you sign up to that, if there’s a termination, it will. It basically means that you can be booted off site for no reason at all. And it is more common in contracts than you would think, which is it is madness. But yeah, it gives that party the right to do that. Usually the principal employer or main contractor. It wouldn’t usually give the subcontractor or the main contractor against the other party that write. But yeah, unfortunately it is a very common thing that we see.

Paul Heming: I’m guessing that that is more commonly not employed to main contractor, but main contractor to subcontractor. If you are on a project where you are a subcontractor and you see this, you see this and you see generally, I’m trying to think of things in your arsenal that you could go back with to have like these often commercially challenging conversations, right? But you could either have a whole ream of these are different reasons why you might be terminated or you might have a termination at will clause in the more brutal sense. Is it unlikely that the main contractor has that in with the employer? It’s like a main contractor amendment to their subcontractors, if anything, like is a way to go back first we talked about that working example about you obviously can’t own my scaffold, but is another way to go back and say, is this something that you have in your contracts with your client and you’re stepping it down to me? Or is this just something that you are coming up with?

Abbie Chisnall: Yeah, definitely. That is something that we would advise on and check because obviously as a subcontractor you might then sub sub-contractual works. So we would always advise in that sense, if your main contractor has a termination at will clause, you then need to have a termination of will at your sub subcontractor contract. Because if not that loss of profit, you could have a loss of profit claim against you because you are terminated, but your contract’s not then automatically terminated with your sub subcontractor. And then you’ve got the same wrongful termination claim back. So yes, it follows the chain and it should be mirrored, it should be back to back because if not, it will give rise to loss of for profit claims.

Paul Heming: The simple reply here, in all instances, I feel, and not everyone agrees with this, is that I want to use the standard form, the definition or the clause in the standard JCT, NEC, whatever I want to use that I don’t care about any amendments and I trust that document. Some people like it, some people don’t like it, some people would like to tweak it. That document has been built by an organization representing everyone. So I would just say, just do it as that and I’ll sign it in the blink of an eye? Just please do it like that. How do you feel about that?

Abbie Chisnall: Yeah, I totally agree. So the termination at will is usually a bespoke amendment. There is an option in the NEC four for termination at will. But again, it’s an option. It’s not the standard template document. So yeah, I agree. They’re there for a reason. Minor amendments, which are project specific I understand, but anything sort of over a page of amendments, I think there’s, you should just have your own bespoke set of terms and conditions if that’s what you want, because there’s no point if you had too heavily amend, it isn’t a JCT or isn’t an NEC, is my opinion.

Paul Heming: No, I completely agree with you and I think we’ve discussed termination at will, termination notices really, really well. And I guess my kind of my conclusion or my wrapping up of all of this is I’d like to ask you, what would you advice be to anyone, whether it’s a main contractor not getting paid by their employer or it’s a subcontractor not getting paid by their main contractor. There will be people listening to today thinking, oh, that’s all good and well, but I’m not being paid. What is your advice to someone who’s experiencing that right now? They feel they’re not getting paid appropriately, fairly. What should they do?

Abbie Chisnall: Definitely understand the payment dates under the contract. I think that’s really key. A lot of the times we see that people don’t understand what the due date is, what the final date for payment is, which is a whole another topic, but really get into grip of what that is. So as soon as the final date for payment expires, you can chase after the money. Keep chasing after it. Don’t just let it go. Keep going and keep accurate records. People in the industry are going to punch charge for everything if there isn’t, if you haven’t got the evidence to back it up. Unfortunately, variations make sure you’re following the contract. I know, that’s what I keep saying and I’m a boring lawyer.

Paul Heming: No, I agree.

Abbie Chisnall: But you need to know if there is a variation provision under the contract and they say you have to have an instruction, make sure you’ve got that instruction, don’t do the work if not, because you’re not going to get paid for it. They are going to claw it back at the end. So it’s all about following the contract, but actually record keeping or following the contract too.

Paul Heming: Sounds like you’ve been listening to the show, to be honest. It’s all we on about.

Abbie Chisnall: And then if you aren’t getting paid is then make sure you’re chasing and then seek legal advice. Unfortunately, if you can’t get that payment through the door, do everything you can your end and then give it to us and we can advise on adjudications or whatever we think it is appropriate. Because sometimes unfortunately you try your best to resolve it. Nobody wants to get it into a dispute. But sometimes cash flow means that you have to, it’s to survive. So yeah.

Paul Heming: But if I make it more complicated for you just because why not. So what will often happen is, and this could, again, this isn’t main contractor to subcontractor. This could be any relationship employer, main contractor, subcontractor. But what will quite often happen is it will not be as simple or as clean as they miss a final date for payment or it’s an instruction, a variation without an instruction. What it’ll often feel like is like a slow death and it’s coming, but it’s very difficult to manage. My own experience tells me this, there’s jobs where you think, I know what they’re up to here and I can’t untwist my arm, if that makes sense. So what is your advice to someone right now who over, they’re on a 12 month contract and it’s a long project and its a few months in and it feels like their client is just slowly chipping away. It’s not a hundred percent, it’s not 0%, its 85, 90, there’s just holding money back and holding money back. How do you advise clients who are experiencing that?

Abbie Chisnall: Again, it will be record keeping because unfortunately if you are going to act on that chipping away and try and have these conversations with the client, unfortunately it’s going to end up in a dispute at the end. And the people who often win the dispute are the people with the best records to prove if someone is chipping away at those payments, they need to have evidence to prove that. If you then put that forward to a third party adjudicator and say, look, I can prove, I did X, Y, and Z, they’ve chipped away at it. They have no evidence for that. The adjudicator is going to swing towards the person with the evidence at the end of the day. So I think record keeping is so key and I understand it’s easy for me to sit here and say that I sit in an office, if you are on site and someone asks you to do something, it’s very difficult. But even if you can just follow up with an email, say I was on, oh, great to see you today, you instructed me to do X, Y and said like that record keeping if then unfortunately as they are actually chipping away, keep going back with evidence, chase payments keep going back. But if they want to do it, they’re going to do it. But it’s taking that step at the end and often we see, oh, but they’ve offered me a new project, so I’m just going to wipe that off. But don’t seek legal advice if you’ve got all those records, go for it, there’ll be a final account dispute. Ultimately, if they’ve been chipping away through the whole project, that could be a lot of money by the end of that final account that they’ve chipped away at. There’s always ways you don’t have to be really aggressive in litigation. You might be able to have them mediation with the other side. You might be able to come, it’s not always, sometimes just a letter from a solicitor and you get the right people talking at the company. Sometimes you’re talking to one person who’s got a very aggressive stance in it, but you speak to the commercial manager, they’re quite reasonable and you can do a deal. But ultimately when it comes to us, our advice will all be dependent on the record.

Paul Heming: And on the contract, which means…

Abbie Chisnall: Yes.

Paul Heming: Yes, you need to be keeping your records and doing a good job of that as part of your daily, weekly, monthly routine as a business. But if you’ve got wrong, if you’ve got termination at will or the termination causes going, taking the conversation back there you are in, you could end up in, no man’s land, right? Where it doesn’t matter if you’ve even got the records, right. So it all comes together and that’s why it’s so paramount to make sure you know what your termination clause are and check that they haven’t been fiddled with.

Abbie Chisnall: Exactly. Yeah.

Paul Heming: Excellent. Well, look, it’s been absolutely brilliant show. It’s flown by, I’m sure it’s absolutely flown by for the listeners as well. I’ve really, really enjoyed talking to you. I will share Abbie’s details in the show notes. Abbie, thank you for coming on the show. Thank you for taking the time to explain those horrible, horrible termination courses to us.

Abbie Chisnall: Yeah, thank you so much for having me. It’s been great. It’s been great to be on the show.

Paul Heming: Lovely, thanks. And guys, as always, I will speak to you all next week. Have a lovely weekend. See you later.

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